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Toyota and Subaru Reach Alliance to Buy Equity Stakes of Each Other

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Toyota and Subaru Reach Alliance to Buy Equity Stakes of Each Other
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According to an announcement made by the two Japan-based automotive companies, Toyota will increase its stake in Subaru, taking it from 17 percent to 20 percent. Toyota’s intentions involve leveraging its scale to keep competing with numerous brands in the development of innovative technologies in the field.

The move is coming roughly four weeks after Toyota made the joint announcement, together with fellow Japanese automotive firm Suzuki, that they both would take equity stakes in the other brand.

Chasing Scale

Alliances like those are proof that vehicle manufacturing companies are considering new strategies in order to chase scale and find more efficient ways to handle cost and promote the development needed to create self-driving cars, EVs, and innovative mobility and transport services.

Toyota offered its thoughts about the alliance with Subaru via a statement, saying that we are currently living a once-in-a-century period of changes and evolution and that both companies are aiming to strengthen their relationship and complement each other with the goal of developing better and more efficient cars.

Car making companies that are known for more traditional approaches, such as Suzuki and Subaru for example, are currently suffering the high pace with which the field is changing: companies are modifying their business models to provide enhanced transportation services and units, instead of just selling vehicles.

A Substantial Investment

Toyota announced that the total amount of the investment would be 80 billion yen, or the equivalent of $742 million, according to the current stock market value of Subaru. The former’s global car sales are ten times bigger than those of Subaru, which will return the favor and acquire a similarly valued stake of Toyota.

Carnorama’s managing director Takeshi Miyao stated that Toyota’s objective seems to be making a fully owned subsidiary out of Subaru, in an effort to come up with a “mega Toyota” that can better cope with competition from other high-profile car makers internationally.

The one between Toyota and Subaru is not the first strategic alliance of that prominence that has been reached in recent times. In fact, car-making companies around the world are doing it with increasing frequency. For example, Volkswagen and Ford Motor Co. stated that they would spend billions in their attempt to develop electric and self-driving cars.

Subaru is now the newest Japanese ally of Toyota, a group that includes Mazda and Yamaha. Meanwhile, Nissan has a partnership with Renault and Mitsubishi.

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Ali Raza

Ali Raza

A journalist, with experience in web journalism and marketing. Ali holds a master degree in finance and enjoys writing about cryptocurrencies and fintech. Ali’s work has been published on a number of cryptocurrency publications.

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